Suppose that in 2005 sales increase by 10 percent over 2004 sales and that 2005 dividends will increase to $112,000. Construct the pro forma financial statements using the percent of sales method. Assume the firm operated at full capacity in 2004. Use an interest rate of 13 percent on the debt balance at the beginning of the year. Assume dividends will grow by 3 percent and that the AFN will be in the form of notes payable.

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Problems June 8 Sample Company is an aerospace manufacturer located in Summerside, PEI. The company’s income statements and balance sheets for the fiscal years ended August 31, 2003 and 2004...